Answer:
Itis better to take the case in hand of 207,000,000 millions
Explanation:
We need to calcualte the present value of a geometric annuity-due
[tex]\frac{1-(1+g)^{n}\times (1+r)^{-n} }{r - g}[/tex]
g 0.05
r 0.04
C 4,515,432
n 26
n 26
[tex]\frac{1-(1+0.05)^{26}\times (1+0.04)^{-26} }{0.04-0.05}[/tex]
127,557,727.45
As is an annuity due, we multiply by (1+r)
127,557,727.45 x (1+0.04) = 132,660,036,548
The present value of the 207,000,000 option is better as the annuity present value is around 130,000,000
